Miami contractor arrested for workers' comp fraud, faces up to 180 years
By underreporting payroll, the construction business shortchanged its workers’ comp carrier by more than $790K in premium payments.
The owner of a Miami-area construction company was arrested for workers’ compensation premium fraud, application fraud and “organized scheme to defraud” for allegedly underreporting payroll to avoid having to pay a higher premium, according to the Florida Department of Financial Services.
In 2018, Hector Gutierrez-Morales, owner of HG & AKE Construction Corp., took out a workers’ comp policy with Traveler Property Casualty of America based on an estimated payroll of $161,000. Based on that information, a policy was issued with an estimated annual premium of around $28,000, according to the financial services department.
Gutierrez-Morales renewed the workers’ comp coverage for two additional years, but failed to notify the carrier of a “significant increase in estimated annual payroll,” according to the state agency. An investigation determined that during the policy period, the company was paid more than $8.8 million for labor from its contractors.
Had the company been honest in reporting its payroll, it would have paid an additional $796,762 in workers’ comp premium.
Annually, workers’ comp sees approximately $34 billion in fraud, according to the Coalition Against Insurance Fraud. Around $9 billion of that total comes from premium fraud, with the rest coming in the form of claims fraud.
“When bad actors scheme to avoid required workers’ compensation coverage, they put their employees and customers in danger,” Florida Chief Financial Officer Jimmy Patronis said in a release. “Fraud like this also drives-up insurance rates for honest contractors in our state that choose to play by the rules.”
Gutierrez-Morales faces up to 180 years in prison if convicted on all charges, according to the financial services department.
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